Sep 30, 2022
VOT Research Desk
Key Insights and Analysis
AUD/USD, CHINA PMI, MARKET SENTIMENT, TECHNICAL FORECAST – TALKING POINTS Risk-off Wall Street move threatens to drag Asia-Pacific markets on Friday Chinese PMI data may help revive APAC sentiment if the data beats estimates
After overnight declines in US stocks, led by a significant drop of 4.91 percent in Apple stock, a heavily weighted S&P 500 component, Asia-Pacific equity markets are in jeopardy. Mary Daly and James Bullard, two members of the Federal Reserve, trumpeted the hawkish outlook of the FOMC, which kept the price of Fed funds futures high. Rate traders anticipate that the Federal Reserve will raise interest rates by 75 basis points in November. However, the US Dollar DXY Index fell for a second day, likely to let off steam following a significant move over the past few weeks.
Prior to the forthcoming Chinese economic data, the Australian dollar is the focus. Analysts anticipate that the purchasing managers’ indexes (PMIs) for the manufacturing and services sectors will cross the wires at 49.7 and 52.4 when the National Bureau of Statistics (NBS) reports the data at 01:30 UTC. That would be little different from 49.4 and 52.6 in August, though iron ore and other industrial steel prices could rise if manufacturing unexpectedly moved above 50.That probably bodes well for the weak AUD/USD.
In comparison to NBS data, the Caixin PMI manufacturing gauge, which will be released shortly at 01:45 UTC, focuses on smaller businesses. The Chinese Yuan gained nearly 1 percent overnight against the United States dollar, but the USD/CNH pair remains above the 7 level, and one-week risk reversals indicate that traders continue to favor call options. China’s iron ore prices have fallen by more than 5% since their peak in September two weeks ago. With EUR/AUD reaching its highest level since July, the Australian dollar is losing ground against its major counterparts.
In addition, data on industrial production and retail sales for the same time period are scheduled to be released, and Japan is scheduled to release an update on its unemployment rate in August. Retail sales are expected to rise to 2.8% from a year ago, up from 2.4% in July, according to analysts.
After making a new 2022 low against the US dollar this week, the Australian dollar is moving back toward channel support. Late last week, prices shattered that channel range to the downside. It’s possible that prices will get a better start if they reclaim the previous support level, which may also act as resistance right now.
